Original Notice.

     Preproposal statement of inquiry was filed as WSR 06-10-020.

     Title of Rule and Other Identifying Information: The department is proposing:

•	The amendment of WAC 388-513-1330 Determining available income for legally married couples for long-term care (LTC) services.

•	The adoption of new WAC 388-513-1363 Evaluating the transfer of an asset for clients found eligible for LTC services on or after May 1, 2006.

     Hearing Location(s): Blake Office Park East, Rose Room, 4500 10th Avenue S.E., Lacey, WA 98503 (one block north of the intersection of Pacific Avenue S.E. and Alhadeff Lane. A map or directions are available at http://www1.dshs.wa.gov/msa/rpau/docket.html or by calling (360) 664-6097), on August 7, 2007, at 10:00 a.m.

     Date of Intended Adoption: Not earlier than August 8, 2007.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504-5850, delivery 4500 10th Avenue S.E., Lacey, WA 98503, e-mail schilse@dshs.wa.gov, fax (360) 664-6185, by 5:00 p.m. on August 7, 2007.

     Assistance for Persons with Disabilities: Contact Jennisha Johnson, DSHS Rules Consultant, by July 31, 2007, TTY (360) 664-6178 or (360) 664-6094 or by e-mail at johnsjl4@dshs.wa.gov.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department is proposing these amendments and new text to change transfer of asset rules for clients found eligible for long-term care (LTC) services. This change is due to the 2005 federal Deficit Reduction Act (DRA).

     Reasons Supporting Proposal: See above.

     Statutory Authority for Adoption: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.575.

     Statute Being Implemented: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.575.

     Rule is necessary because of federal law, Deficit Reduction Act (Public Law 109-171).

     Name of Proponent: Department of social and health services, governmental.

     Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Lori Rolley, P.O. Box 45600, Olympia, WA 98504-5600, (360) 725-2271.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rules and determined that no new costs will be imposed on small businesses or nonprofits.

     A cost-benefit analysis is not required under RCW 34.05.328. Rules are exempt, per RCW 34.05.328 (5)(b)(vii), relating only to client medical or financial eligibility.

June 19, 2007

Stephanie E. Schiller

Rules Coordinator

     (1) The department must apply the following rules when determining income eligibility for LTC services:

     (a) WAC ((388-450-0005(3), Income--Ownership and availability and WAC 388-475-0200,)) 388-475-0600 Definition of income SSI-related medical;

     (b) WAC ((388-450-0085, Self-employment income--Allowable expenses)) 388-475-0650 Available income;

     (c) WAC ((388-450-0210 (4)(b) and (e), Countable income for medical programs, and WAC 388-475-0750, SSI-related medical - Countable unearned income)) 388-475-7000 Income eligibility;

     (d) WAC 388-475-0750 Countable unearned income;

     (e) WAC 388-475-0840(3) Self employment income-allowance expenses;

     (f) WAC 388-506-0620, SSI-related medical clients; and

     (((e))) (g) WAC 388-513-1315 (15) and (16), Eligibility for long-term care (institutional, waiver, and hospice) services.

     (2) For an institutionalized client married to a community spouse who is not applying or approved for LTC services, the department considers the following income available, unless subsection (4) applies:

     (a) Income received in the client's name;

     (b) Income paid to a representative on the client's behalf;

     (c) One-half of the income received in the names of both spouses; and

     (d) Income from a trust as provided by the trust.

     (3) The department considers the following income unavailable to an institutionalized client:

     (a) Separate or community income received in the name of the community spouse; and

     (b) Income established as unavailable through a fair hearing.

     (4) For the determination of eligibility only, if available income described in subsections (2)(a) through (d) minus income exclusions described in WAC 388-513-1340 exceeds the special income level (SIL), then:

     (a) The department follows community property law when determining ownership of income;

     (b) Presumes all income received after marriage by either or both spouses to be community income; and

     (c) Considers one-half of all community income available to the institutionalized client.

     (5) If both spouses are either applying or approved for LTC services, then:

     (a) The department allocates one-half of all community income described in subsection (4) to each spouse; and

     (b) Adds the separate income of each spouse respectively to determine available income for each of them.

     (6) The department considers income generated by a transferred resource to be the separate income of the person or entity to which it is transferred.

     (7) The department considers income not generated by a transferred resource available to the client, even when the client transfers or assigns the rights to the income to:

     (a) The spouse; or

     (b) A trust for the benefit of the spouse.

     (8) The department evaluates the transfer of a resource described in subsection (6) according to WAC 388-513-1363, 388-513-1364, 388-513-1365 and 388-513-1366 to determine whether a penalty period of ineligibility is required.

[Statutory Authority: RCW 74.08.090. 06-07-077, § 388-513-1330, filed 3/13/06, effective 4/13/06. Statutory Authority: RCW 11.92.180, 43.20B.460, 48.85.020, 74.04.050, 74.04.057, 74.08.090, 74.09.500, 74.09.530, 74.[09.]575, 74.09.585; 20 C.F.R. 416.1110-1112, 1123 and 1160; 42 C.F.R. 435.403 (j)(2) and 1005; and Sections 17, 1915(c), and 1924 (42 U.S.C. 1396) of the Social Security Act. 00-01-051, § 388-513-1330, filed 12/8/99, effective 1/8/00. Statutory Authority: RCW 74.08.090 and 74.09.500. 99-06-045, § 388-513-1330, filed 2/26/99, effective 3/29/99. Statutory Authority: RCW 74.08.090, 74.05.040 and 20 CFR 416.1110-1112, 1123 and 1160. 97-10-022, § 388-513-1330, filed 4/28/97, effective 5/29/97. Statutory Authority: RCW 74.08.090 and Title XIX State Agency Letter #94-33. 95-02-028 (Order 3819), § 388-513-1330, filed 12/28/94, effective 1/28/95. Statutory Authority: RCW 74.08.090. 94-10-065 (Order 3732), § 388-513-1330, filed 5/3/94, effective 6/3/94. Formerly parts of WAC 388-95-335 and 388-95-340.]

     • Refer to WAC 388-513-1364 for rules used to evaluate asset transfers made on or after April 1, 2003 and before May 1, 2006.

     • Refer to WAC 388-513-1365 for rules used to evaluate asset transfer made prior to April 1, 2003.

     (1) When evaluating the effect of the transfer of asset made on or after May 1, 2006 on the client's eligibility for LTC services the department counts sixty months before the month of application to establish what is referred to as the "look-back" period.

     (2) The department does not apply a penalty period to transfers meeting the following conditions:

     (a) The total of all gifts or donations transferred do not exceed the average daily private nursing facility rate in any month;

     (b) The transfer is an excluded resource described in WAC 388-513-1350 with the exception of the client's home, unless the transfer of the home meets the conditions described in subsection (2)(d);

     (c) The asset is transferred for less than fair market value (FMV), if the client can provide evidence to the department of one of the following:

     (i) An intent to transfer the asset at FMV or other adequate compensation. To establish such an intent, the department must be provided with written evidence of attempts to dispose of the asset for fair market value as well as evidence to support the value (if any) of the disposed asset.

     (ii) The transfer is not made to qualify for LTC services, continue to qualify, or avoid Estate Recovery. Convincing evidence must be presented regarding the specific purpose of the transfer.

     (iii) All assets transferred for less than fair market value have been returned to the client.

     (iv) The denial of eligibility would result in an undue hardship as described in WAC 388-513-1367.

     (d) The transfer of ownership of the client's home, if it is transferred to the client's:

     (i) Spouse; or

     (ii) Child, who:

     (A) Meets the disability criteria described in WAC 388-475-0050 (1)(c); or

     (B) Is less than twenty-one years old; or

     (C) Lived in the home for at least two years immediately before the client's current period of institutional status, and provided care that enabled the individual to remain in the home; or

     (iii) Brother or sister, who has:

     (A) Equity in the home, and

     (B) Lived in the home for at least one year immediately before the client's current period of institutional status.

     (e) The asset is transferred to the client's spouse or to the client's child, if the child meets the disability criteria described in WAC 388-475-0050 (1)(c);

     (f) The transfer meets the conditions described in subsection (3), and the asset is transferred:

     (i) To another person for the sole benefit of the spouse;

     (ii) From the client's spouse to another person for the sole benefit of the spouse;

     (iii) To trust established for the sole benefit of the individual's child who meets the disability criteria described in WAC 388-475-0050 (1)(c);

     (iv) To a trust established for the sole benefit of a person who is sixty-four years old or younger and meets the disability criteria described in WAC 388-511-1105 (1)(b) or (c); or

     (3) The department considers the transfer of an asset or the establishment of a trust to be for the sole benefit of a person described in subsection (1)(f), if the transfer or trust:

     (a) Is established by a legal document that makes the transfer irrevocable;

     (b) Provides that no individual or entity except the spouse, blind or disabled child, or disabled individual can benefit from the assets transferred in any way, whether at the time of the transfer or at any time during the life of the primary beneficiary; and

     (c) Provides for spending all assets involved for the sole benefit of the individual on a basis that is actuarially sound based on the life expectancy of that individual or the term of the trust, whichever is less; and

     (d) The requirements in subsection (2)(c) of this section do not apply to trusts described in WAC 388-561-0100 (6)(a) and (b) and (7)(a) and (b).

     (4) The department does not establish a period of ineligibility for the transfer of an asset to a family member prior to the current period of long-term care service if:

     (a) The transfer is in exchange for care services the family member provided the client;

     (b) The client has a documented need for the care services provided by the family member;

     (c) The care services provided by the family member are allowed under the medicaid state plan or the department's waiver services;

     (d) The care services provided by the family member do not duplicate those that another party is being paid to provide;

     (e) The FMV of the asset transferred is comparable to the FMV of the care services provided;

     (f) The time for which care services are claimed is reasonable based on the kind of services provided; and

     (g) Compensation has been paid as the care services were performed or with no more time delay than one month between the provision of the service and payment.

     (5) The department considers the transfer of an asset in exchange for care services given by a family member that does not meet the criteria as described under subsection (4) as the transfer of an asset without adequate consideration.

     (6) If a client or the client's spouse transfers an asset within the look-back period without receiving adequate compensation, the result is a penalty period in which the individual is not eligible for LTC services.

     (7) If a client or the client's spouse transfers an asset on or after May 1, 2006, the department must establish a penalty period by adding together the total uncompensated value of all transfers made on or after May 1, 2006. The penalty period:

     (a) For a LTC services applicant, begins on the date the client would be otherwise eligible for LTC services based on an approved application for LTC services or the first day after any previous penalty period has ended; or

     (b) For a LTC services recipient, begins the first of the month following ten-day advance notice of the penalty period, but no later than the first day of the month that follows three full calendar months from the date of the report or discovery of the transfer; or the first day after any previous penalty period has ended; and

     (c) Ends on the last day of the number of whole days found by dividing the total uncompensated value of the assets by the statewide average daily private cost for nursing facilities at the time of application or the date of transfer, whichever is later.

     (8) If an asset is sold, transferred, or exchanged, the portion of the proceeds:

     (a) That is used within the same month to acquire an excluded resource described in WAC 388-513-1350 does not affect the client's eligibility;

     (b) That remain after an acquisition described in subsection (8)(a) becomes an available resource as of the first day of the following month.

     (9) If the transfer of an asset to the client's spouse includes the right to receive a stream of income not generated by a transferred resource, the department must apply rules described in WAC 388-513-1330 (6) through (8).

     (10) If the transfer of an asset for which adequate compensation is not received is made to a person other than the client's spouse and includes the right to receive a stream of income not generated by a transferred resource, the length of the penalty period is determined and applied in the following way:

     (a) The total amount of income that reflects a time frame based on the actuarial life expectancy of the client who transfers the income is added together;

     (b) The amount described in subsection (10)(a) is divided by the statewide average daily private cost for nursing facilities at the time of application; and

     (c) A penalty period equal to the number of whole days found by following subsections (7)(a), (b), and (c).

     (11) A penalty period for the transfer of an asset that is applied to one spouse is not applied to the other spouse, unless both spouses are receiving LTC services. When both spouses are receiving LTC services;

     (a) We divide the penalty between the two spouses.

     (b) If one spouse is no longer subject to a penalty (e.g. the spouse is no longer receiving institutional services or is deceased) any remaining penalty that applies to both spouses must be served by the remaining spouse.

     (12) If a client or the client's spouse disagrees with the determination or application of a penalty period, that person may request a hearing as described in chapter 388-02 WAC.

     (13) Additional statutes which apply to transfer of asset penalties, real property transfer for inadequate consideration, disposal of realty penalties, and transfers to qualify for assistance can be found at:

     (a) RCW 74.08.331 Unlawful practices-Obtaining assistance-Disposal of realty;

     (b) RCW 74.08.338 Real property transfers for inadequate consideration;

     (c) RCW 74.08.335 Transfers of property to qualify for assistance; and

     (d) RCW 74.39A.160 Transfer of assets--Penalties.

[]

© Washington State Code Reviser's Office